Government same but country poised for change

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The PM has several months to meet election promises before a compliant Senate is in place.

This is the victory that turns conventional wisdom on its head. This time, the Government stays the same but the country seems set to change.

The prospect of a seamless leadership transition and a compliant Senate points to a new prime minister, the sale of Telstra, media law deregulation and a swag of other big changes before the next election.

Howard's sweetest victory of all means that he, and only he, will decide when he leaves the stage and the circumstances in which he leaves, to rework his asylum seeker declaration from the last election.

There is no urgency for an answer in the coming months, of course, when his focus will be on delivering the $13 billion in promises he made during the campaign, dealing with the unexpected and reviving his reform agenda in advance of a Senate transformed.

But, by the end of 2005, he will have to decide whether he intends to run again in 2007 at the age of 68, having spent more than a decade in office and outlasted all PMs bar Menzies - or whether he will initiate a smooth transition to Peter Costello.

Howard says he will stay for as long as the party wants him, but the truth is that it will be up to Howard to tell the party what is in its best interests.

After all, who would dare tell the man who has actually increased the Coalition vote at his third and fourth wins that he should not contest the fifth? Certainly, not Peter Costello.

There is enough of a buffer - both in the number of seats held and their margins - for Howard to be tempted to stay, given his good health and love of the job.

But if the priority is maximising the party's prospects and walking away in the knowledge that he has left the economy and his party in good shape, the decision is straight forward.

The alternative is to hang on, as Bob Hawke insisted on doing after his fourth win in 1990, witnessing inflamed tensions when things go bad, as they tend to do, and either handing over the baton under duress or being beaten by Latham, who will benefit from another three years as Labor leader.

Howard has already made the transition easier by campaigning as a team and giving Costello credit for the economic management, which was the foundation of the Coalition's case for re-election.

Indeed, this victory is Costello's vindication almost as much as it is Howard's. It is the product of Howard's leadership and often ruthless political cunning and Costello's hard work.

One of Labor's mistakes was to assume Costello was a massive negative for the Government. He wasn't. He is one of the reasons why the Liberal swing in Victoria (3.9 per cent) was higher than the national average (3.2 per cent).

There are several lessons for Labor, but the biggest is that disunity is death. The Coalition's scare campaign on interest rates would have struck a lesser chord in the electorate had the Opposition not been a dysfunctional rabble for much of the last three years.

Latham campaigned strongly and has shown himself to be one who grows into each role he fills. He says he is in the prime of life now at 43, but he should be a better leader when he is 46.

Other lessons include the importance of getting your big policies out into the marketplace early, unless you are absolutely convinced your opponent or the economy (or both) are on the skids - that governments lose elections.

This is the second election where a big Labor policy has been to take funding from the wealthiest schools. It may go down well in the branches, but it undermines the central Latham pitch that aspiration is good and will be rewarded.

The same problem of having losers was evident in the family tax policy, where Latham seemed to be saying that those at the bottom who refused to climb his ladder of opportunity would pay a price. Many would think this not the Labor way.

Latham has identified key areas of unfairness and need in education, health and tax and gone a long way toward providing answers. His task now is make sure those answers are bullet-proof by the time he next faces the people.

Finally, there was the mistake of believing there would be a reward for trumping Howard on forests policy before he had played his hand. There was little time to assess the policy, but the politics were awful.

As one Coalition source remarked: "The Greens have not emerged as a great threat to us, but as a great threat to the Labor Party."

Now, Labor under Latham faces the great challenge of regrouping after a fourth straight loss, as Howard marches confidently toward what is likely to be his final test.